Ian Norris, the former chief executive of Morgan Crucible, the engineering group, has lost the first round in his battle to avoid extradition to the US, where he faces charges of price-fixing.

Two High Court judges ruled yesterday that Charles Clarke, the home secretary, had acted lawfully in permitting the use of fast-track extradition procedures with the US, even though the arrange-ments were not reciprocal.

Mr Norris's lawyers had challenged the legitimacy of the UK's continued adherence to the 2003 UK-US extradition treaty, given the US Senate's failure to ratify the US side of the arrangements, as part of his appeal.

Alistair Graham, Mr Norris's solicitor, said: "The government has spent two years telling business leaders that their fears about the new extradition arrangements are unfounded; that there is no imbalance in our extradi-tion arrangements with the US, and that this is all a matter for the court. This judgment demonstrates the fallacy of those arguments, and that what both we, and business, have been saying is true: namely, that it is not a level playing field and that US citizens enjoy a considerable advantage over their UK counterparts in this vital area."

Sir Digby Jones, director- general of the CBI employers' group, said: "Parliament believed this legislation was targeted at terrorists and drug dealers, and that it would be reciprocal. The courts are merely seeking to interpret a law that is manifestly unbalanced and excessive. The government needs to put rights its error and restore natural justice."

The 2003 treaty arrange-ments do away with the need for US authorities to present a prima facie case when seeking extradition from the UK. Critics say they fail to provide insufficient alternative safeguards.

Lawyers for Mr Norris had sought to argue that, since the US had yet to ratify its side of this agreement, the home secretary's designation of the US as a country to which the fast-track procedures should apply was "inconsistent with the obligations of the UK" under the former 1972 UK-US treaty.

In short, they contended, the home secretary was acting illegally and irrationally in trading away "treaty rights".

But yesterday, Lord Justice Judge said that they had been unable to show any previous authority that suggested that the 1972 treaty created personal rights enforceable byits individual citizens. Moreover, he said, "the extradition process created by parliament for UK citizens does not require reciprocity of mutuality".

He added: "If, as I believe, the designation order [vis a vis the US] was lawfully made by the secretary of state following the affirmative resolutions of both houses of parliament . . . I can see no basis for concluding that its continuation in force represents the exercise of a legally flawed or irrational decision."

A separate appeal by Mr Norris against extradition, partly on human rights grounds, has been stayed while overlapping issues are resolved in another "white collar" US extradition case: that of the three former NatWest bankers who US authorities wish to try on Enron- related fraud charges.